The World Gold Council stated on Friday that India’s gold demand is anticipated to increase further in 2022, potentially widening the trade deficit and putting pressure on the struggling rupee. According to Reuters, Somasundaram PR, regional chief executive officer of WGC’s Indian operations, gold consumption is expected to reach a six-year high of 800-850 tonnes this year, up from 797.3 tonnes in 2021.
According to the WGC’s regional head, India’s gold consumption increased by 79 percent last year due to pent-up demand caused by the coronavirus disease (Covid-19) pandemic and an apparent improvement in consumer confidence, which boosted retail jewellery sales. Because of the second Covid wave’s devastation and the limits enforced by authorities, several couples have decided to postpone their weddings until late 2021 or even 2022.
‘Muted wedding celebrations as a result of regulations mean more savings, and that money is moving into gold,’ Somasundaram told Reuters.
Gold consumption nearly quadrupled in the December quarter from a year earlier to a record 343.9 tonnes, according to a WGC study released on Friday. Gold is a favourite gift from relatives and visitors during weddings. With local gold prices hovering around 48,000 per 10 grammes this week, Somasundaram believes that Indian consumers are more accepting of the current price level. In August 2020, gold prices reached a new high of 56,191 rupees per 10 grammes, setting a new high.
‘As we approach 2022, we expect Indian investment demand to continue strong. Higher inflation expectations and likely rupee weakening as a result of the increasing trade gap could help it ‘According to the WGC’s study.
Despite hefty import duties, imports accounted for 86 percent of India’s gold supply between 2016 and 2020, according to a December WGC analysis on bullion trade in India. Another analysis, Gold Outlook 2022, claimed that significant jewellery markets, such as India, might help boost gold’s performance.
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